24749703
Description
Flashcards by Sophia Lynch, updated more than 1 year ago
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Created by Sophia Lynch
over 3 years ago
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| Question | Answer |
| The process of 'catch-up' for 'catch-up' countries involves... (5) | 1. Very high investment and rapid increases in K/L (Capital to labour) ratios 2. Very high investment in education 3. More modern technology 4. Increase in importance of market production and labour force participation 5. Increased specialisation and manufacturing exports |
| What is 'productivity' in an economic sense? | The amount of goods and services that a worker can produce from each hour of work. It plays a key role in determining the living standards of all nations around the world. GDP - the amounts of goods and services produced in a given year |
| What factors influence productivity? (4) | 1. Access to physical capital 2. Human capital 3. Natural resources 4. Technological knowledge |
| What is the production function used for? | To describe the quantity of inputs used in production and the quantity of output from production. |
| What is the formula for the production function? | Y = F (L, K, H, N, A) |
| What does 'Y = F (L, K, H, N, A)' stand for? | Y = quantity of output F ( ) = is a function that shows how the inputs are combined L = quantity of labour K = quantity of physical capital H = quantity of human capital N = quantity of natural resources A = available production technology |
| What is an important determinant of productivity? | Capital per worker. |
| Constant Returns to Scale Y/L = F (1, K/L, N/L, H, A) What do these functions stand for? | Y/L = output per worker (average labour productivity) K/L = physical capital per worker N/L = natural resources per worker H/L = human capital per worker |
| What is 'capital deepening'? | A solution to economic growth primarily if you are behind and need to catch up. This will eventually run into diminishing marginal returns to capital. |
| What is one way to raise future productivity? | Invest more current resources into the production of capital. High growth countries tend to have rates go high investment. |
| Saving and growth - what is the trade-off? | A tradeoff of lower consumption now for higher consumption later. |
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